Also, I was going through some older materials, and I found a color-coded comparative chart [PDF] that a volunteer made for us long ago. It's a comparison of a July 8, 2003 S3 with an October 14, 2003 amendment, an S-3/A. There was a further amendment, an S-3/A filed on October 23, 2003 as well. It's fascinating to watch the SCO story morph just in these three versions, particularly now, when we can compare all three with what SCO testified to at trial.

First, though, here are the new filings:

548 - Filed & Entered: 08/22/2008
Terminated: 08/25/2008
Motion for Extension of Time
Docket Text: Joint MOTION for Extension of Time Regarding Deadlines for Proposed Final Judgment and Pre-Judgment Interest Submission filed by Defendant Novell, Inc.. (Attachments: # (1) Text of Proposed Order) Motions referred to Brooke C. Wells.(Sneddon, Heather)

549 - Filed & Entered: 08/25/2008
Order on Motion for Extension of Time
Docket Text: ORDER granting [548] Motion for Extension of Time Regarding Deadlines for Proposed Final Judgment and Pre-Judgment Interest Submission. Signed by Judge Dale A. Kimball on 8/25/08. (jwt)

The Morphing SCO Story

Why I never used this chart is a mystery now, so many years later. I suspect, knowing me that either I ran out of time to proof it as so much was happening so fast in 2003, or we intended to do a new version when SCO filed another amendment a few days after we had done the earlier comparison. But if you are the volunteer who did it, please sing out so you can get credit.

Here are some things that stand out to me, but do check the PDF, so you get the benefit of the color coding and because you may notice things I miss:

July 8, 2003 S3	October 14, 2003 S-3/A	October 23, 2003 S-3/A
We initiated the SCOsource licensing effort in January 2003 to review the status of UNIX licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses. This effort resulted in the execution of two license agreements during the April 30, 2003 quarter. These two license agreements are typical of those we expect to enter into with developers, manufacturers, and distributors of operating systems in that they are non-exclusive, perpetual, royalty-free, paid up licenses to utilize the UNIX source code, including the right to sublicense that code.	We initiated the SCOsource licensing effort in January 2003 to review the status of UNIX licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses. This effort resulted in the execution of two license agreements during the quarter ended April 30, 2003, and the receipt of additional license fees from these two contracts during the July 31, 2003 quarter.	We initiated the SCOsource licensing effort in January 2003 to review the status of UNIX licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses. This effort resulted in the execution of two license agreements during the quarter ended April 30, 2003, and the receipt of additional license fees from these two contracts during the July 31, 2003 and the October 31, 2003 quarter.

Fascinating, no? My favorite part is where they say that the Microsoft and Sun Microsystems licenses are typical of what they planned to sell to others as SCOsource licenses -- to manufacturers and developers too -- and that the licenses were "to utilize the UNIX source code, including the right to sublicense that code." Does that match what they said at trial, or what Judge Dale Kimball found in his July order? Well, you can't blame Judge Kimball. He has to go by what he heard at trial, along with any exhibits. For that matter, SCO had changed its story by October of 2003, as you'll see.

One of the things Judge Kimball wrote was this, about OpenServer:

But SCO did receive some ownership rights and it was authorized to release whatever claims it was entitled to bring concerning those ownership rights. There was evidence presented at trial that SCO was concerned with whether technology from its releases of UnixWare and OpenServer was improperly in Linux. UnixWare and OpenServer are both UNIX System V operating systems.

Actually, if you go back to the first SCOsource offering, the one that did have to do with OpenServer, you'll find that it was about offering shared libraries from OpenServer, but they were libraries you only needed if you wanted to run Unix applications on Linux. There aren't many who desired to do that, or needed to. That SCOsource license had nothing to do with infringement of OpenServer code *inside* Linux. Here's how SCO itself described the offering in the press release:

The first offering from SCOsource will be SCO System V for Linux -- an end-user licensed product for use on Linux systems. SCO System V for Linux provides unbundled licensing of SCO's UNIX System shared libraries for use with UNIX applications, enabling them to run on Linux.

A product. Remember Judge Kimball saying SCOsource wasn't about a product? Well, SCO said it was, to the SEC, for one bright, shining moment of truth, in July of 2003.

So, threatening end users of Linux with litigation over shared libraries in OpenServer would be impossible, unless they were pursuing a type of activity extraneous to just using Linux. So to say that SCOsource was offered to cover infringement of OpenServer code in Linux is, frankly, preposterous. It was SCO's method for getting money from people who wanted to get a license to do something convenient. I believe, IIRC, that at trial it was brought out that no one bought that license. You might license OpenServer to get the Xenix legacy stuff. But that isn't about infringement; it was about a product you might want for very narrow and confined reasons. Sun told us they wanted a license to Xenix, if you recall. OpenServer is where you could find Xenix.

How about Unix System V and UnixWare? Are they the same thing? At trial, they were, according to SCO. Not in 2003, they weren't, not to SCO back then. Note the major differences in the three drafts of the wording of the section Recent Developments:

July 8, 2003 S3	October 14, 2003 S-3/A	October 23, 2003 S-3/A
One of the assets we acquired from Tarantella was all right, title and interest in and to UNIX and UnixWare, including source code and intellectual property rights. UNIX System V was initially developed by AT&T Bell Labs and over 30,000 licensing and sublicensing agreements have been entered into for the use and distribution of UNIX. These licenses led to the development of several derivative works based on UNIX System V, including our own SCO UnixWare and SCO OpenServer, Sun's Solaris, IBM's AIX, SGI's IRIX, HP's UX, Fujitsu's ICL DRS/NX, Siemens' SINIX, Data General's DG-UX, and Sequent's DYNIX/Ptx. These operating systems are all derivative works based upon, or modifications of the original UNIX System V source code currently owned by us. As such, we retain the right to control certain uses of all UNIX-based derivative works and to prohibit use of UNIX and UNIX-based derivative works for others and to prohibit the unauthorized disclosure of UNIX and UNIX-based derivative works to third parties, including open source developers. We initiated the SCOsource effort to review the status of these licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses. This effort resulted in the execution of two license agreements during the April 30, 2003 quarter. The first of these licenses was with a long-time licensee of the UNIX source code which is a major participant in the UNIX industry and was a "clean-up" license to cover items that were outside the scope of the initial license. The second license was to Microsoft Corporation ("Microsoft") and covers Microsoft's UNIX compatibility products, subject to certain specified limitations. These license agreements are typical of those we expect to enter into with developers, manufacturers, and distributors of operating systems in that they are non-exclusive, perpetual, royalty-free, paid up licenses to utilize the UNIX source code, including the right to sublicense that code. The amount that we receive from any such licensee will generally depend on the license rights that the licensee previously held and the amount and level of our intellectual property the licensee desires to license. The two licensing agreements signed by us to date resulted in revenue of $8,250,000 during the quarter ended April 30, 2003, and provide for an aggregate of an additional $5,000,000 to be paid to us over the next three quarters. These contracts do not provide for any payments beyond 2003, except that Microsoft was granted the option to acquire expanded licensing rights, at its election, that would result in additional payments to us if exercised. In connection with the execution of the first license agreement, we granted a warrant to the licensee to purchase up to 210,000 shares of our common stock, for a period of five years, at a price of $1.83 per share. This warrant has been valued, using the Black-Scholes valuation method, at $500,000. Because the warrant was issued for no consideration, $500,000 of the license proceeds have been recorded as warrant outstanding and the license revenue associated with this arrangement has been reduced for the fair value of the warrant. During the course of the review of our intellectual property rights, we became concerned generally about the existence of UNIX source code in the Linux operating system. We have discovered that UNIX source code, including UNIX System V source code and derivative works based thereon are prevalent in the Linux kernel. In March 2003, we filed a complaint against IBM alleging, in part, that it had breached its license agreement with us by, among other things, inappropriately contributing UNIX source code to the open source community and seeking to use its knowledge and methods with respect to UNIX source code and derivative works and modifications licensed to it to destroy the value of the UNIX operating system in favor of promoting the adoption by businesses of the Linux operating system, of which it has been a major backer. As a result of these breaches, we notified IBM that we have terminated its UNIX System V Software and Sublicensing Agreements. This termination makes any further use or distribution by IBM of the AIX operating system a violation of our contractual rights. In May 2003, we sent letters to approximately 1,500 large corporations notifying them that the use of the Linux operating system may be a violation of our intellectual property rights. The success of our SCOsource licensing initiative, at least initially, will depend to a great extent on the perceived strength of our intellectual property and contractual claims and our willingness to enforce our rights. Many, particularly those in the open source community, dispute the allegations of infringement that we have made. While our SCOsource initiative resulted in significant revenue during the quarter ended April 30, 2003, and we continue negotiations with other industry participants that we believe will lead to additional contracts, as a result of the factors outlined above, we are unable to predict the level or timing of future revenue from this source, if any.	During recent quarters, we have experienced a decline in our product and services revenue primarily attributed to the worldwide economic slowdown, lower information technology spending and increased competition in the operating system market. However, we have implemented cost reduction measures to decrease personnel and excess facilities costs and have significantly reduced our overall operating expenses. These measures, combined with revenue of $15,530,000 from our intellectual property rights licensing initiative, SCOsource, resulted in the first two profitable quarters in our history. During the course of the review of our intellectual property rights, we became concerned generally about the existence of UNIX source code in the Linux operating system. We have alleged that UNIX source code and unauthorized derivatives of UNIX source code are prevalent in Linux. In March 2003, we filed a complaint against IBM alleging, in part, that it had breached its license agreement with us by, among other things, inappropriately contributing UNIX source code to the open source community and seeking to use its knowledge and methods with respect to UNIX source code and derivative works and modifications licensed to it to destroy the value of the UNIX operating system in favor of promoting the adoption by businesses of the Linux operating system, of which it has been a major backer. Based on these breaches, we terminated the license agreement we have with IBM that permitted the use of our UNIX source code in the development of IBM's AIX operating system. In May 2003, we sent letters to approximately 1,500 large corporations notifying them that the use of the Linux operating system may be a violation of our intellectual property rights.... Subsequent to July 31, 2003, we terminated the UNIX license agreement we had with Sequent Computer Systems, Inc. ("Sequent") (which was previously acquired by IBM) based on similar breaches we had claimed against IBM. This license was the basis for Sequent's UNIX-based offering, the DYNIX/Ptx operating system.... While our SCOsource initiative has resulted in revenue of $15,530,000 through July 31, 2003, and we continue negotiations with other industry participants that we believe may lead to additional SCOsource license agreements, we are currently unable to predict the level or timing of future revenue from this source, if any.	During recent quarters, we have experienced a decline in our product and services revenue primarily attributed to the worldwide economic slowdown, lower information technology spending and increased competition in the operating system market. However, as explained elsewhere in this filing, we claim that much of this competition is in violation of our contractual and intellectual property rights. We have implemented cost reduction measures to decrease personnel and excess facilities costs and have significantly reduced our overall operating expenses. These measures, combined with revenue of $15,530,000 from our intellectual property rights licensing initiative, SCOsource, resulted in the first two profitable quarters in our history during the six months ended July 31, 2003. In addition, subsequent to July 31, 2003, Microsoft exercised an option it held to acquire a broader license to our UNIX source code, that resulted in a payment to us of $8 million.... During the course of the review of our intellectual property rights, we became concerned generally about the existence of UNIX source code in the Linux operating system. We have alleged that UNIX source code and unauthorized derivatives of UNIX source code are prevalent in Linux. In March 2003, we filed a complaint against IBM alleging, in part, that it had breached its license agreement with us by, among other things, inappropriately contributing UNIX source code and derivatives to the open source community and seeking to use its knowledge and methods with respect to UNIX source code and derivative works and modifications licensed to it to destroy the value of the UNIX operating system in favor of promoting the adoption by businesses of the Linux operating system, of which it has been a major backer. Based on these breaches, we terminated the license agreement we have with IBM that permitted the use of our UNIX source code in the development of IBM's AIX operating system. In May 2003, we sent letters to approximately 1,500 large corporations notifying them that the use of the Linux operating system may be a violation of our intellectual property rights.... While our SCOsource initiative has resulted in revenue of $15,530,000 through July 31, 2003, and we continue negotiations with other industry participants that we believe may lead to additional SCOsource license agreements, we are currently unable to predict the level or timing of future revenue from this source, if any.

So, what stands out to me is that SCO claimed it owned the Unix System V source code, such as was licensed to IBM and Sun, and it was *those licenses* that it began to review in connection with SCOsource. It says it also looked around to see who else might be using "its IP" without getting licenses, like folks who maybe switched to Linux from Unix, and then ran Unix applications on Linux by means of OpenServer shared libraries that they didn't have a license for, according to SCO.

But it turned out SCO didn't own the copyrights to that first category of licensed code, the code IBM and Sun licensed from AT&T. So, unless SCO can demonstrate some code unique to UnixWare, code developed by it after 1995, I'd have to conclude that SCOsource was entirely about System V source code, the trunk of the tree, no matter what it called the license. Where is that code that is unique to UnixWare, developed by SCO itself that SCOsource was about?

It's also of interest that in the October 14 draft, SCO admitted what really caused them to be losing business, and it wasn't because of infringed code.

That reminds me. One of the interesting changes is this one, at the beginning, where SCO describes its business:

July 8, 2003 S3	October 14, 2003 S-3/A	October 23, 2003 S-3/A
On May 16, 2003, our stockholders approved an amendment to our certificate of incorporation that changed our name to The SCO Group, Inc. Our business focuses on developing and marketing reliable, cost-effective UNIX software products and related services and web services for the small to medium business market. We are pursuing our SCOx strategy to provide a common framework for the integration of internet applications (web services) and server based applications. In addition to SCOx, we established SCOsource in January 2003 to review and enforce our intellectual property surrounding the UNIX operating system.	On May 16, 2003, our stockholders approved an amendment to our certificate of incorporation that changed our name to The SCO Group, Inc. Our business focuses on marketing reliable, cost-effective UNIX software products and related services and developing web services for the small to medium business market. We are pursuing our SCOx strategy to provide a common framework for the integration of internet applications (web services) and server based applications. In addition to SCOx, we established SCOsource in January 2003 to review and enforce our intellectual property surrounding the UNIX operating system.	On May 16, 2003, our stockholders approved an amendment to our certificate of incorporation that changed our name to The SCO Group, Inc. Our business focuses on marketing reliable, cost-effective UNIX software products and related services and developing web services for the small to medium business market. We are pursuing a strategy to provide a common framework for the integration of internet applications (web services) and server based applications called SCOx. In addition to SCOx, we established SCOsource in January 2003 to review and enforce our intellectual property surrounding the UNIX operating system.

They deliberately dropped the word "developing" from the two later drafts. Why? Of course, you have to be truthful to the SEC, unless you like to live dangerously, so what did they know? Later, they did do some development work to bring OpenServer and UnixWare more up to date. In fact, in the October 23, 2003 S-3/A, they mention having plans to do so, when discussing how it planned to spend the money it got from BayStar:

We anticipate using the funds available to us from the foregoing transactions for our internet-based offerings under our SCOx initiative, to target vertical markets for our existing UNIX-based offerings, to expand our UNIX licensing program and provide migration options for Linux end users, to roll-out major upgrades for our UNIX-based operating systems, and to protect our intellectual property rights.

And we know they did do major upgrades, but after it had sued all the companies it felt it could. It did release new versions of both Unixware and OpenServer, having announced it in 2003 and 2004, with a 2005 target release date. For example at SCOforum 2004, SCO announced what the upgrade to OpenServer would involve:

Yes, Legend, shipped after SCO sued IBM and everyone else and years after SCOsource was announced. Again, this was to happen in 2005, so nothing in SCOsource in 2003 was about Legend:

Notice the Open Source applications thrown in? Here are some more SCO advertized in connection with SCO OpenServer 5.0.7:

Perhaps that is why SCO struck out the word "developing" other than in connection with web services from the first draft description of its business in 2003. If anyone gets sued by SCO, these little details might be of some use in discovery. What SCO developed and when might tell the tale. That, to me, was a missed opportunity in the SCO v. Novell trial, namely asking SCO to identify precisely what infringed or infringe-able UnixWare or OpenServer code it can claim as its own that was covered by any SCOsource license offered that is different from the code that we know SCO doesn't own the copyrights to. I suspect there isn't any, actually. But, knowing SCO, there may be future opportunities to get this narrowed down nicely.

I only mention it because I have formed a strong impression of SCOfolk that they are very creative souls. If they get financing, I do expect further creative morphing of the SCO story, and that's why I'm laying down the foundation now, piece by little piece, of what really happened.